Crackpot Realists and Permanent War

by Ann Berg

While economic pundits point fingers at loose
lending for the malodor in the housing market that is now filling the noses
of financiers, they miss the primary cause: permanent war. Permanent war has
caused the nation's institutions – political, social, and economic – to be organized
into an impervious structure without which war could not be tolerated or financed.

Although 9/11 pushed the war machine into high gear, political centralization
and the structuring of American society around war first gained a foothold during
World War II. In 1956, five years before President Dwight D. Eisenhower warned
in his farewell address of the ascendancy of the military-industrial complex
(a phrase that originally included the word congressional), the anti-imperialist
C. Wright Mills described the triad of power in his book The
Power Elite. Stressing how the military entered the political and economic
spheres only temporarily during the First World War, he related how modern warfare
and its need for massive industrial capacity – along with support from the technological
and scientific communities – propelled the military to new heights of influence.
Wrote Mills:

"For the first time in American history, men in authority are talking
about an 'emergency' without a foreseeable end. … The only seriously accepted
plan for 'peace' is a fully loaded pistol. In short, war or a high state of
war preparedness is felt to be the normal and seemingly permanent condition
of the United States."

The sheer scale of the war machine's supply and service sector called for new
cooperation among the military, corporate, and political prongs of power, resulting
in what Mills called an "interlocking directorate." Since cooperation
expanded the power and prestige of its members, the directorate, according to
Mills, would remain slavishly devoted to war in the face of all contrary facts
and logic. As if speaking today, Mills said of the power elite, "They have
no image of what 'victory' might mean, and they have no idea of any road to
victory." He recounted an interview between Gen. James Van Fleet and a
reporter over the stalemate produced by the Korean War:

Reporter: "How may we know, General, when and if we achieve victory?"

Van Fleet: "I don't know, except that somebody higher up will have
to tell us."

Mills' prediction of the increasing integration and institutionalization of
this ruling trinity is manifest today in the actions of congressional Democrats,
who are as keen on military intervention as their Republican colleagues. They
cannot resist earmarks for more military spending, because power and its attendant
prerogatives are their only interests. Their constant lookout for future wealth
and privilege has rendered the lessons of the past – or any talk about them
– irrelevant. Could any of these Democrats articulate before the electorate
how territorial fragmentation has been the trend of nation-states since the
collapse of four empires during WWI (and thereby expose our interventionist
nation-building policy as folly)? Would they dare acknowledge Orwell's insight
that conquests and occupations were doomed to failure by the middle of the 20th
century (so we need interchangeable enemies)? They would be branded by the media
as fringe. Mainstream America – desirous only of an endless tableau of "human
interest" stories – would discard them. Their power and prestige dissolved,
the dissidents' book deals, lobbying posts, and celebrity engagements would
forever shutter.

According to Mills, the corporate elite, or men "controlling property"
(in the modern sense of assets), soared in influence during the 1950s
as "the coincidence of interest [grew] between those who controlled the
means of production and those who controlled the newly enlarged means of violence."
But even Mills could not have foreseen the astonishing rise to power of corporate
moguls 50 years later.

The corporate elite has amassed and centralized power in a mirror of the central
government and military establishment. While workers occupy the lowest rung,
shareholders – contributing what Mussolini once described as "anonymous
floating capital" – have scant power to determine the pay or policies of
the top decision-makers. CEOs and upper management, like generals and political
appointees, not only evade accountability but also get the monetary equivalent
of the Medal of Freedom with multi-million-dollar payoffs for egregious incompetence.
Not by coincidence, CEOs stock their boards of directors with politicians and
military men who lend an aura of integrity and eminence to their decisions –
especially decisions concerning their own compensation.

The corporate stranglehold on the mind of the polity is on full display in
the ongoing charade of televised candidate debates. Dressed up as folksy town-hall
meetings or other such democratic exercises, these debates are nothing more
than mindless distractions until the new president is installed at the helm
of the dreadnought. While propagating notions of psychic and material well-being
to the masses, the corporate organism continues to gorge at the trough of subsidies,
depletion allowances, and tax gimmicks. Between intervals of shining allurements,
the corporate media still saturates the airwaves with serial mediocrity, "synthetic
celebrities … who make virtue out of cultural poverty," further grinding
the individual into what Mills called "the spectator of everything but
the human witness of nothing."

But it is in monetary policy that the political-military-corporate triad has
achieved its most stupendous success. No longer compelled by the discipline
of the gold standard (snuffed by the debts of the Vietnam War), the power elite
has turned the biblical fishes and loaves narrative into a real-life story.
Because of global market integration, the unchecked growth of complex financial
products, and the ballooning money supply, the financial sector has been able
to extract billions out of millions. The sheer size of the phenomenon has no
precedent. Leverage, they call it. (See here,
here, and here.)

To appreciate how complexity has clouded monetary thinking, recall a simpler
time when Argentina and Brazil experienced hyperinflation in the 1980s. It was
a monetary phenomenon caused principally by the IMF's recycling of Mideast petrodollars
into loans for the two countries. The increased money supply flowed directly
into wages and prices for one reason – it had nowhere else to go. These countries
lacked stock, bond, derivative, or real-estate markets that could have absorbed
the flow of funds. The IMF naturally blamed the inflation on "poor investment
choices." Hyperinflation exists in Zimbabwe today just as it did in Germany,
Austria, Hungary, and Russia during the inter-war period as the result of massive
fiat money printing together with undeveloped capital markets.

Today's ultra-complex
financial markets have enabled the Federal Reserve for the last 20 years
to perpetuate one of the greatest hoaxes of history. By systematically eliminating
from its inflation index any goods and services that registered price increases,
such as food and energy, the Fed has declared inflation tame while simultaneously
increasing the money supply by multiples. While creating a mirage of prosperity
for the "ownership
society," this legerdemain has delivered gargantuan gains to the financial
industry and to the Fed's own private share-holding banks – all with the fulsome
obeisance of Congress. How handy the creation of this grand sea of liquidity
has been to the power triad! Up until mid-August, when the tide offered up a
great
shoal of rotting fish, the sea has washed the electorate in cheap credit
and – above all – kept the war machine speeding at full throttle. Not surprisingly,
last week in an I-feel-your-pain kind of moment, the Fed chief eased the discount
rate for his banking chums, a move described by a Financial Times
economist as "socialism for capitalists."

In The Power Elite's last chapter, "The Higher Immorality,"
Mills condemned the mindlessness and blunted moral sensibility of men of affairs
for whom power, wealth, and celebrity trump knowledge, culture, and principle.
They are second-rate minds "in command of the ponderously spoken platitudes."
Mills called those in charge "crackpot realists," explaining, "in
the name of realism they have constructed a paranoid reality all their own;
in the name of practicality they have projected a utopian image of capitalism."

So as the treacherous sea of liquidity now threatens to capsize the utopian
image of state capitalism, it is no wonder that the crackpot realists are readying
for ever more slaughter to sustain their paranoid reality of permanent war.

Ann Berg
has spent a 30-year career in commodities and capital markets
as a trader, consultant, and writer. While a commodity futures
trader and Director of the Chicago Board of Trade, she advised
foreign governments, NGOs (the United Nations, World Bank),
think tanks (Catalyst Institute), and multinational and foreign
corporations on a variety market-related issues. She was also
a frequent conference speaker at international derivatives markets
forums. In recent years, she has contributed articles to several
commodities/capital markets publications, including Futures
Magazine, Traders Source, Financial Exchange,
and the Financial Times editorial page. Berg is also
an artist. She is currently working on a body of work entitled
The Unknown Unknowns  The Things You Dont Know
You Dont Know, which explores U.S. national security
policy.

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